If Traders in a Market Have Rational Expectations, Then

question 30

Multiple Choice

If traders in a market have rational expectations, then

• A)the price of an asset equals its fundamental value.
• B)prices of riskier assets are higher than prices of less risky assets.
• C)past prices of assets do not affect market participants' expectations of future asset prices.
• D)they make use of less information than they would if they had adaptive expectations.

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Definitions:

Span of Control

The number of subordinates that a manager or supervisor can directly control or oversee effectively.

Management Theorists

Scholars and practitioners who develop theories on how organizations can effectively be managed and operated.

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A lack of complete information about the environment.